Thursday, April 29, 2010

I have a dealer that called me asking why he was loosing money. He has a great location, tourists, and a good mechanic that I exchange emails with every week. I told him because you run the shop trying to save money in the short run.

My advice for scooter rental shops is stock, stock, stock.

His shop ( let's call him John Smith) Makes a ton of money, but he could make so much more if he stocked more parts.

I got into 3 seconds into explaining it to the store and he didn't get it. He just wanted a MAGIC BULLET to solve his problme. Mr. Smith said he didn't like having to look at tires and "his money on the wall." He couldn't grasp something called "the opportunity cost" when he has units that are down because he refuses to stock belts or tires that means his rental fleet is down.

Now let me see if this makes sense:


So when he has 20 scooters rented and 5 are waiting for repairs should anyone come in to rent those 5 that means his business lost that amount. So 5 X $100 per day = $500 because he won't stock a $20 tire or a carb. Waiting a day or two for belts and tires doesn't make sense.

Same goes for the fact that a good friend of mine gets all the local service because if a consumer has a flat tire he wants it fixed that same day. If your only form of transportation is a scooter on South Beach you don't want to wait two days for a tire. See Store:

I got into it with the shop and I actually convinced the mechanic. He got. So instead of buying one tire for the down bike they purchased two. It made sense for him and it made sense for us as a supplier. Did I really care about one tire? Not really I spend that on lunch, but what I care about is to see someone who has a good idea and a nice store who might go out of business for not running his business the right way.

My second point was that it applies to how you source. The fact that his rental fleet is made up of 5 brands. It makes no sense whatsoever. He buys solely on price. What's cheap today will cost you tomorrow. I told him call my good friends at TGB they have great scooters for rental fleets, instead he buys from whoever is selling the cheapest scooters that week. That makes stocking even harder because the parts are non-compatible.

Buying from one or two sources &
Having PULL with a supplier

When you buy from multiple suppliers solely based on price you cannot have a scalable business. You won't have any pull if you buy from 10 suppliers the same applies to the shop when asking for warranty, parts, or better pricing.

You buy batteries from one guy because they are $2 cheaper, the next supplier because his helmets cost $10 less, and then the next because he offered a brake pad at $1. That's thinking you're saving money today only to loose it in the long run. Parts Unlimited and even companies like MRP give discounts based on volume and if can't get that volume no supplier will ever give you better pricing. The problem with the "Chinese Shop" mentality is they want the lowest price without having volume actually sometimes just buying once a year. If you buy once a year as a store you're not a dealer for them. That's why respectable companies have yearly buy ins to separate the store that should be representing them from the guy working from gis garage at home. You can't have one without the other. You have to give more business to your bigger suppliers.

There is also a big issue stores forget all the time


If you want to have a rental fleet that doesn't go down all the time. Rent better scooters like a TGB or Kymco, Even better my good friend is the new importer for CPI.
If you run a shop like John don't buy some cheap Chinese scooter because they are cheap, but something you can rent next month and the month after that. Buy Taiwanese or a brand that will support you!


So pick one or two good brands. Stick to them. Stock parts. Pick one or two good suppliers, stick to them, give them volume and you will get better pricing. I see too many mistakes everyday and when the store closes they end up asking where did it go wrong? The videos speak for themselves if you visit a shop thats been open 10 years and you see the secret its right in front of you. Enjoy the videos.

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